Alibaba acquires 20% stake in Hony-backed Suning

The deal allows Alibaba to become the second-largest shareholder in Suning. In return, Suning will invest RMB14 billion by subscribing to 27.8 million newly-issued Alibaba shares, translating into a 1.1% stake in the e-commerce giant. The transaction represents a net investment by Alibaba of about RMB14 billion.

Under the partnership, Suning will open a flagship store on Alibaba's B2C platform Tmall.com, selling consumer electronics, home appliances and baby products. In addition, Suning's nationwide logistics network - including eight distribution centers, 57 regional distribution centers, 353 city forwarding centers and over 1,700 last-mile delivery station - will join Cianiao, a logistics network formed by Alibaba in May 2013.

Through this online-to-offline operation, customers can soon expect to receive their orders in as little as two hours, the companies said in a joint statement. Suning has more than 1600 stores covering 289 cities across China. Its e-commerce platform, Suning.com, ranks among top three Chinese B2C companies.

"This collaboration signals a new trend in the Internet age: Strengthening China's traditional industries by leveraging the power of Internet. It will also help transform China's manufacturing industry and broaden the global horizons of Chinese brands," Jindong Zhang, Suning's chairman, said in the statement.

Suning has struggled to run its traditional bricks-and-mortar chain store business in the face of increased online competition. Last October, it sold 11 stores to CITIC Securities' direct investment arm Goldstone Investment for $655 million. Meanwhile, the company is investing heavily in its online business. The same month, Hony Capital and Suning bought a controlling interest in Chinese online video streaming platform PPTV for $420 million. Last January, Suning acquired group buying site Manzuo, facilitating a full exit for VC backer KPCB China.

Hony invested RMB1.2 billion in Suning in 2011, as part of a private placement worth up to RMB5.5 billion. As of the end of last year, the GP owned a 1.34% in Suning.

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• Topics
• Greater China
• Consumer
• Technology
• China
• TMT
• Alibaba Group
• Hony Capital
• Consumer